Lecture by A. Bulatov on "Optimal Mechanism with Asymmetrically Budget Constrained Buyers"
On Wednesday, November 20 the all-Russian seminar "Mathematical methods of decision analysis in economics, finance and politics" was held. A. Bulatov gave a lecture on "Optimal Mechanism with Asymmetrically Budget Constrained Buyers".
Authors: Alexei Boulatov, Sergei Severinov (HSE University)
The paper characterizes the optimal (revenue-maximizing) mechanism for allocating a good to buyers who face asymmetric budget constraints. The optimal mechanism belong to one of two classes. When the budget differences between the buyers are small, the mechanism discriminates only between high-valuation types for whom the budget constraint is binding. All low valuations buyers are treated symmetrically despite budget differences. When budget differences are sufficiently large, the mechanism discriminates in favor of buyers with small budgets when the valuations are low, and in favor of buyers with larger budgets when the valuations are high. In an extension, we also provide a characterization of the constrained-efficient (surplus maximizing) mechanism and demonstrate that it also belongs to one of the two above-described classes.